At a glance, the previously struggling Napster appears to have bounced back and is now doing well. As outlined in the company's fiscal first quarter financial report, the music service can boast a positive cash flow for the fifth straight quarter with revenue holding steady at about $30 million. According to Napster's brass, the company is making the right move and is in a good position moving forward. But convincing investors of that is another story altogether.
Despite the positive quarterly financial reports, Napster's stock hit an all-time low in mid-July and today is trading at less than half of what it went for one year ago. Subscribers are down 7 percent from last quarter, and a group of impatient investors have initiated a proxy battle to win seats on the board.
"It's kind of damned if you and damned if you don't," Napster chairman and CEO Chris Gorog laments . "The bottom line is, five years ago we were number 2 or 3 in the this industry, and five years later we're still number 2 or 3 in this industry."
Gorog went on to explain that, with the shift towards web-base system and DRM-free downloads, his company is in a position to "address all available customers out there," but admits it could take up to a year before the latest efforts translate into revenue or additional customers. Problem is, Napster might be on borrowed time.
Going up against the likes of Rhapsody and ad-supported services of Last.fm means things don't look to get any easier, and with a smaller market capitalization, Gorog understands his company is ripe for a takeover, a fact which has led to the hiring of investment bank UBS to field offers.
Is the end looming for Napster? Post your thoughts!
Image Credit: Napster